VA awards $28M delivery order to UPS for courier services, highlighting a competitive procurement

Contract Overview

Contract Amount: $28,061,397 ($28.1M)

Contractor: United Parcel Service CO.

Awarding Agency: Department of Veterans Affairs

Start Date: 2020-10-01

End Date: 2021-09-30

Contract Duration: 364 days

Daily Burn Rate: $77.1K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: SHIPPING

Place of Performance

Location: SHAWNEE, JOHNSON County, KANSAS, 66227

State: Kansas Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $28.1 million to UNITED PARCEL SERVICE CO. for work described as: SHIPPING Key points: 1. The contract leverages a large, established provider for critical delivery needs. 2. Competition was robust, suggesting potential for favorable pricing. 3. Performance is tied to a fixed-price structure, aligning incentives. 4. The award falls within a mature and well-defined service category. 5. Geographic focus on Kansas indicates localized operational support.

Value Assessment

Rating: good

The $28 million delivery order for courier services appears reasonable given the scale and duration. While specific per-unit cost benchmarks are not provided, the use of a major carrier like UPS suggests adherence to industry standards. The firm fixed-price contract type helps control costs for the Department of Veterans Affairs (VA). Further analysis would require comparing unit costs for similar delivery volumes and distances within the federal government or commercial sector.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under 'Full and Open Competition After Exclusion of Sources,' indicating that while initial solicitations may have had limitations, the final award was made after a broad competitive process. The specific details of 'exclusion of sources' are not elaborated, but the 'full and open' designation implies multiple bidders were considered. This level of competition generally promotes price discovery and encourages contractors to offer competitive rates.

Taxpayer Impact: A competitive award process helps ensure that taxpayer dollars are used efficiently by driving down costs through market forces.

Public Impact

Veterans and VA staff benefit from reliable and timely delivery of medical supplies, equipment, and administrative documents. Essential healthcare services are supported through the consistent movement of critical items. The primary geographic impact is within Kansas, ensuring localized support for VA facilities in the state. The contract supports the logistics and transportation workforce employed by UPS.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for service disruptions if UPS experiences widespread operational issues.
Limited visibility into specific performance metrics without further data.
Dependence on a single large contractor for a critical function.

Positive Signals

Leverages a well-established and experienced provider with a proven track record in logistics.
Firm fixed-price contract provides cost certainty for the agency.
Competitive award process suggests a fair market price was likely achieved.

Sector Analysis

The courier and express delivery services sector is a mature industry characterized by significant competition among large national and international players, as well as regional and local providers. Federal spending in this area supports a wide range of agency needs, from mail delivery to critical supply chain logistics. Benchmarks for this sector often focus on cost-per-package, delivery speed, and geographic coverage, with major carriers like UPS, FedEx, and USPS dominating a substantial portion of the market.

Small Business Impact

This contract was awarded to a large prime contractor, United Parcel Service Co., and there is no indication of a small business set-aside. While the prime contractor is a large business, there may be opportunities for small businesses to participate as subcontractors within UPS's network. However, the primary contract does not directly benefit small businesses through a set-aside provision.

Oversight & Accountability

The Department of Veterans Affairs is responsible for overseeing this contract. Oversight mechanisms would typically include performance monitoring, invoice review, and contract closeout procedures. Transparency is generally maintained through contract databases like FPDS. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse related to the contract.

Related Government Programs

Federal Express Corporation Contracts
US Postal Service Contracts
Logistics and Supply Chain Management Services
Medical Supply Chain Services

Risk Flags

Potential for service disruption
Dependence on a single large provider

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $28.1 million to UNITED PARCEL SERVICE CO.. SHIPPING

Who is the contractor on this award?

The obligated recipient is UNITED PARCEL SERVICE CO..

Which agency awarded this contract?

Awarding agency: Department of Veterans Affairs (Department of Veterans Affairs).

What is the total obligated amount?

The obligated amount is $28.1 million.

What is the period of performance?

Start: 2020-10-01. End: 2021-09-30.

What is the historical spending trend for courier and delivery services by the Department of Veterans Affairs?

Analyzing historical spending data for the Department of Veterans Affairs (VA) on courier and delivery services reveals a consistent reliance on these services to support its vast network of facilities and patient care. While specific figures fluctuate year-to-year based on agency needs and contract awards, the VA generally allocates significant resources to ensure the timely transport of medical supplies, pharmaceuticals, lab samples, and administrative documents. Spending patterns are often influenced by factors such as the expansion of telehealth services, changes in healthcare delivery models, and the overall operational tempo of the VA healthcare system. Examining trends over the past five to ten years would likely show a steady or increasing demand for these services, potentially with a shift towards more specialized or expedited delivery options for critical medical items. The $28 million awarded to UPS in this instance represents a substantial, but not necessarily anomalous, portion of the VA's annual expenditure in this category, reflecting the scale of operations required to serve a large veteran population.

How does the pricing of this UPS delivery order compare to other federal contracts for similar services?

Directly comparing the pricing of this specific $28 million delivery order to other federal contracts for similar services is challenging without access to detailed unit pricing data (e.g., cost per package, per mile, or per pound) for all contracts. However, the fact that this contract was awarded under 'Full and Open Competition' suggests that UPS was selected through a process designed to achieve competitive pricing. Generally, large federal contracts with major carriers like UPS are negotiated based on volume discounts and established rate structures. Benchmarking would involve comparing the effective per-unit costs derived from this contract against similar large-volume contracts awarded by other agencies (e.g., GSA, DoD) or against publicly available commercial rate cards, adjusted for federal volume and service level agreements. Given UPS's market position and the competitive nature of the award, it is reasonable to infer that the pricing is aligned with market rates for large-scale, reliable delivery services, though specific cost savings compared to alternatives would require granular data.

What are the key performance indicators (KPIs) typically associated with this type of federal delivery contract?

Key performance indicators (KPIs) for federal delivery contracts like this one typically focus on reliability, timeliness, and cost-effectiveness. Common KPIs include on-time delivery rates (percentage of packages delivered within the promised timeframe), package integrity (percentage of packages delivered without damage or loss), tracking accuracy (reliability of shipment tracking information), and response times for service issues or inquiries. For medical or sensitive materials, additional KPIs might involve chain-of-custody verification and temperature control maintenance. The contract's firm fixed-price nature incentivizes the contractor to meet these KPIs efficiently to maximize profit. The Department of Veterans Affairs would likely monitor these metrics through performance reports submitted by UPS and potentially through direct observation or audits to ensure service quality and compliance with the contract's terms and conditions.

What is the track record of United Parcel Service (UPS) in fulfilling federal government contracts, particularly with the Department of Veterans Affairs?

United Parcel Service (UPS) has a long-standing and extensive track record of fulfilling federal government contracts across various agencies, including the Department of Veterans Affairs (VA). As a major global logistics provider, UPS possesses the infrastructure, technology, and experience necessary to manage large-scale delivery operations for government entities. Their federal contract history typically involves providing a wide range of shipping and logistics services, from routine mail and package delivery to specialized transportation of sensitive materials. For the VA, UPS has likely been a key partner in ensuring the efficient movement of medical supplies, pharmaceuticals, and equipment to healthcare facilities nationwide. While specific performance data for individual contracts is often proprietary, UPS's continued success in winning and executing federal contracts, often through competitive bidding processes, indicates a generally positive performance history and a demonstrated ability to meet government requirements for reliability and service.

Are there any specific risks associated with relying on a single large contractor like UPS for essential delivery services?

Relying on a single large contractor like UPS for essential delivery services presents several potential risks. Firstly, there's the risk of service disruption due to unforeseen events affecting UPS's operations, such as labor disputes, severe weather events impacting their network, or major system outages. Such disruptions could significantly impede the VA's ability to deliver critical supplies and services. Secondly, a lack of ongoing competition after the initial award could potentially lead to less aggressive pricing in future contract renewals or modifications, although the initial award was competitive. Thirdly, dependence on one provider might reduce the agency's flexibility to adapt quickly to changing logistical needs or to incorporate innovative solutions offered by smaller, more specialized providers. Mitigating these risks often involves robust contract management, clear performance expectations, contingency planning, and potentially diversifying logistics providers for different types of services or geographic areas in the long term.

Industry Classification

NAICS: Transportation and Warehousing › Couriers and Express Delivery Services › Couriers and Express Delivery Services

Product/Service Code: TRANSPORT, TRAVEL, RELOCATION › TRANSPORTATION OF THINGS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: United Parcel Service Inc

Address: 1400 N HURSTBOURNE PKWY, LOUISVILLE, KY, 40223

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $28,061,397

Exercised Options: $28,061,397

Current Obligation: $28,061,397

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: HTC71117DC003

IDV Type: IDC

Timeline